Ridley Inc. Reports Financial Results for Fiscal 2013 First Quarter
(firmenpresse) - MANKATO, MINNESOTA and WINNIPEG, MANITOBA -- (Marketwire) -- 10/24/12 -- Ridley Inc. (TSX: RCL) today reported its financial results for the first quarter of fiscal 2013, the three months ended September 30, 2012. All currency amounts are stated in U.S. dollars unless otherwise noted.
For the first three months of fiscal 2013, Ridley's earnings before interest, taxes, depreciation and amortization (EBITDA (i)) were $10.2 million compared to $3.8 million last year. Net profit after income taxes (NPAT) was $5.3 million ($0.41 per share) compared to $0.7 million ($0.06 cents per share) last year.
"Our earnings results for this quarter are clearly satisfying, but we note that these were the result of exceptional circumstances impacting commodity prices and forage availability largely brought about by the severe drought in the United States. We remain concerned for our customers, livestock and poultry producers, whose operations are being stressed by high commodity prices and increased costs from replacing normal forage sources with commercial feed supplements," said Steve VanRoekel, President and CEO of Ridley Inc. "While Ridley is well positioned to respond to market dynamics, we are also cognizant that these are unusual conditions. Eventually the effects of the drought, and its positive stimulus to feed demand, will diminish and more normal conditions should return," added VanRoekel.
Ridley's tonnage volumes were 3.9% higher in the first quarter of fiscal 2013 while gross profits increased by 32.5% to $22.5 million from $17.0 million last year. Sales revenues of $174.3 million were 11.4% higher than last year but the major part of this increase was the effect of higher raw material costs on selling prices. The increase in Ridley's gross profits this quarter reflects volume growth, partly the effect of the drought on demand for feed and forage supplementation, and inventory gains realized from sharply higher prices in the last several months for commodities and other feed ingredients.
Net operating expenses decreased by $1.2 million on more efficient administrative activities and a reduction in bad debts provisions. Operating expenses last year included a loss on the sale of facilities and overheads related to two facilities that were closed later in the year.
U.S. Feed Operations (USFO) and Ridley Block Operations (RBO) produced strong results in the first quarter of fiscal 2013 on increased volumes of feed supplements and feed blocks in the beef cattle sector and improved unit margins. Prices for most feed commodities were sharply higher in the first quarter of fiscal 2013 as a result of drought conditions throughout much of the United States. Inventory gains from rising feed ingredient prices were favourable to unit margins. Poor pasture and forage conditions contributed to increased demand for supplements. Ridley Feed Ingredients (RFI) reported results in the first quarter that were largely unchanged from last year. Canadian Feed Operations (CFO) reported lower volumes in the first quarter as a result of the temporary closure of a facility in Brandon, Manitoba during a major capital project.
On October 18, 2012, Ridley announced that it had entered into agreements with Masterfeeds Inc., a subsidiary of Omaha-based Ag Processing Inc. (AGP), to merge their respective Canadian animal nutrition businesses into a new limited partnership entity that will operate as Masterfeeds LP, headquartered in London, Ontario. The new entity will operate, among other things, 22 feed manufacturing plants and employ over 500 people in a business spanning across Quebec, Ontario and the Prairie Provinces. Each of Masterfeeds Inc. and Ridley Inc. will contribute essentially all of their Canadian feed operating assets in exchange for relative shareholdings in Masterfeeds LP. That transfer is expected to result in no material effect on the structure or other operations of Ridley Inc. Completion of the merger is expected in the second quarter of Ridley's fiscal 2013 and is subject to the execution of definitive agreements and normal conditions including regulatory approvals.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This management's discussion and analysis dated as of October 24, 2012 and the accompanying interim consolidated financial statements for the three months ended September 30, 2012 have been prepared using International Financial Reporting Standards ("IFRS").
First Quarter Results
The following summary data is presented to assist in understanding the fiscal 2013 first quarter results:
Consolidated First Quarter Results
Revenue of $174.3 million in the first quarter of fiscal 2013 was higher by $17.8 million from the same period last year. A comparison of revenue is not necessarily indicative of the strength of Ridley's business because revenue is influenced by fluctuating commodity prices. Sharply rising feed ingredient prices account for the major part of the increase in revenues in the first quarter of fiscal 2013. Total sales volume, as measured in tons of feed products sold, was 3.9% higher than the prior year. The increase in volume was concentrated in the RBO and USFO segments which have benefited from improvements in the demand for feed supplementation in the beef and dairy sectors. Persistent drought in the south-central U.S. has prompted an increase in sales of feed supplement blocks suited to open range cattle. Although the beef cattle population has declined for several years, tighter stocks have meant significantly improved cattle prices enabling cow/calf producers to operate profitably during the quarter.
Consolidated gross profit in the first quarter of fiscal 2013 was $22.5 million compared to $17.0 million in the same period of fiscal 2012. USFO's gross profit in the first quarter of fiscal 2013 increased by $2.5 million on growth in volumes and higher unit margins from inventory gains during a period of rising raw material prices. RBO's gross profits increased by $2.4 million in the period on strong volume growth in a profitable beef production economy and weather conditions that were positive to feed supplementation. RFI's gross profits were slightly lower over last year as a result of lower volumes and higher manufacturing costs that offset improved unit margins. CFO's gross profits improved by $0.7 million in the first quarter as improved unit margins more than offset lower volumes.
Operating expenses, which include technical services, selling, administration expenses and research and development, were $14.3 million in the first quarter of fiscal 2013 compared to $15.5 million last year. Administration expenses were lower by $0.6 million in the period due to more efficient operations and the elimination of consulting fees related to the implementation last year of lean manufacturing initiatives. Other income in the first quarter this year includes a reduction of $0.4 million in bad debts provisions. The loss on sale of facilities of $0.3 million in the first quarter of fiscal 2012 relates to the disposal of previously closed facilities in Syracuse, Indiana and Manitou, Manitoba.
EBITDA is comprised of operating income before depreciation, amortization and exceptions. For the three months ended September 30, 2012 EBITDA was $10.2 million compared to $3.8 million for the same period last year. There were no material exceptions in the first quarter of the current year. Exceptions in the first quarter of fiscal 2012 were comprised of a $0.2 million loss net of income taxes on the sale of a redundant facility.
Net earnings after taxes for the first quarter of fiscal 2013 were $5.3 million (earnings per share of $0.41) compared to $0.7 million (earnings per share of $0.06) in the same period of fiscal 2012.
Comprehensive Income
Comprehensive income (loss) is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Other comprehensive income (OCI) is comprised entirely of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Comprehensive income in the first quarter of fiscal 2012 was $6.2 million which was comprised of net income of $5.3 million, as reported above, plus unrealized gains of $0.9 on translation of the financial statements of Canadian entities to U.S. currency. Last year, an unrealized loss of $1.9 million on translation of Canadian currency resulted in a comprehensive loss of $1.2 million in the first quarter.
SEGMENT RESULTS
The following is a summary of operating income (loss) of Ridley's reporting segments.
Canadian Feed Operations (CFO)
The Canadian Feed Operations (CFO) segment consists of eight full-line production facilities operating in Canada, producing and marketing products for the core animal nutrition market. CFO plants derive most of their business by manufacturing and marketing a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Prairie Provinces and Ontario. Tonnage volume was lower by 5.6% in the first quarter of fiscal 2013 compared to last year mainly due to the temporary closure of the Brandon, Manitoba facility during a major capital project to replace ingredient bins. The facility resumed full operations in October this year. CFO gross profits in the first quarter this year were $2.9 million compared to $2.1 million in the same period last year. Improved unit margins in supplements and ingredients, increased volume of high value added micro premixes, and lower manufacturing costs, more than offset lower overall volumes in the first quarter this year. Operating expenses in the first quarter of fiscal 2013 were also lower by $0.4 million as a result of more efficient administrative activities and a reduction in outside consulting projects related to implementation of lean manufacturing initiatives.
U.S. Feed Operations (USFO)
The U.S. Feed Operations (USFO) segment consists of twenty-one full-line production facilities operating in the United States producing and marketing products for the core animal nutrition market. USFO plants derive most of their business by manufacturing and marketing a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Midwestern United States. Tonnage volume was higher by 8.2% in the first quarter of fiscal 2013 compared to last year. The increase in volumes in the first quarter of 2012 reflects a stronger performance in sales of higher value added supplements in the beef cattle sector.
Gross profits in the first quarter this year were $10.6 million compared to $8.1 million in the same period last year. Unit margins were higher in this year as a consequence of higher trending feed ingredient markets. USFO operating expenses in the first quarter of fiscal 2013 were lower by $0.5 million following from a reduction of $0.4 million in bad debts provisions and more efficient administrative activities.
Ridley Feed Ingredients (RFI)
The Ridley Feed Ingredients (RFI) segment produces and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives and micro feed ingredients to customers throughout North America from its facility in Mendota, Illinois. Revenue in the first quarter of fiscal 2013, including intersegment sales, decreased by 5.9% from the same period last year, as a result of declining prices for feed-grade vitamins and amino acids, which comprise the major part of RFI's manufactured and resale products. Tonnage volume was slightly lower in the first quarter and average unit margins in the first quarter were lower than last year due to the decline in key raw materials, but these were largely offset by an increase in supplier rebates over last year. Variable production costs and manufacturing overheads increased in the quarter and, as a result, RFI reported a 2.6% decrease in gross profit from last year. As administrative expenses were lower from last year, largely from the consulting fees incurred last year in lean manufacturing initiatives, RFI produced an increase in operating income of 11.7% to $0.7 million in the first quarter of fiscal 2013.
Ridley Block Operations (RBO)
The Ridley Block Operations (RBO) segment manufactures a complete range of block supplements, including low moisture, pressed, compressed, composite and poured blocks and loose bagged minerals from seven U.S. based facilities. Tonnage volume in the first quarter of fiscal 2013 was higher by 21.4% relative to last year as a result of a favourable beef cattle economy and producers' needs for increased feed supplementation following from the severe drought which reduced the quantity and quality of pasture and forages. Costs of production and manufacturing overhead were higher in the quarter because of the increased volume, but these manufacturing costs were held to an increase of less than 6% overall, which enabled RBO to report a 45.8% increase in gross profit. The $0.1 million decrease in operating expenses in the first quarter of fiscal 2013 reflects the inclusion last year of a $0.3 million loss (before income taxes) on the sale of the previously closed facility in Syracuse, Indiana.
Liquidity/Capital Resources/Cash Flow
Ridley's non-cash working capital and debt-to-equity positions are summarized below.
Net debt of $12.3 million as at September 30, 2012 was comprised of total long term debt of $14.0 million less $1.7 million of cash and short term deposits. For the three months year-to-date the Company funded $2.9 million of capital expenditures from the proceeds of debt financing.
The following is a summary of cash generated or utilized by business operations, net of capital expenditures on plant and equipment and other intangibles, excluding business acquisitions:
For the first quarter of fiscal 2013, cash flows from operations net of capital expenditures were a deficit of $3.1 million compared to a deficit of $4.8 million in the same three-month period last year. Net non-cash working capital balances increased by $7.1 million in the three months ended September 30, 2012. Delays in the implementation of upgrades to the Company's business systems in September resulted in the accumulation of higher accounts receivable and accounts payable balances at the end of the first quarter. Those balances have since been reduced as the Company completed its system upgrades. Inventories were also higher at the end of the period due to higher raw material prices and additional stocks on hand as the Company responded to anticipated feed demands from the severe drought in U.S. markets.
Capital Expenditures
Capital expenditures on property, plant and equipment, and intangible assets (software) in the first quarter of fiscal 2013 were $2.9 million, compared to $2.1 million in the same period a year ago. Major capital expenditures in the first three months of fiscal 2013 included the replacement of ingredient bins at the Brandon, Manitoba facility and the installation of robotic package handling equipment at four U.S. facilities.
Business Acquisitions
The Company has entered into an agreement with Masterfeeds Inc., a subsidiary of Omaha-based Ag Processing Inc. (AGP), to merge their respective Canadian animal nutrition businesses into a new limited partnership entity that will operate as Masterfeeds LP, headquartered in London, Ontario. The new entity will operate, among other things, 22 feed manufacturing plants and employ over 500 people in a business spanning across Quebec, Ontario and the Prairie Provinces. Each of Masterfeeds Inc. and Ridley Inc. will contribute essentially all of their Canadian feed operating assets in exchange for relative shareholdings in Masterfeeds LP. That transfer is expected to result in no material effect on the structure or other operations of Ridley Inc. Completion of the merger is expected in the second quarter of Ridley's fiscal 2013 and is subject to the execution of definitive agreements and normal conditions including regulatory approvals.
Outstanding Share Data
The Company's share capital consists of an unlimited number of common shares, with no par value. On December 12, 2011, the Company received approval from the Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid for the Company's shares through the facilities of the TSX. The shares repurchase program permits the Company to purchase for cancellation up to 639,499 of its common shares over the twelve-month period ending December 14, 2012. As at September 30, 2012, the Company had repurchased no shares under the current normal course issuer bid. The number of shares outstanding as at September 30, 2012 and as at October 24, 2012 was 12,789,978.
Seasonality and Commodity Variability
The Company experiences seasonal variations in revenue. Historically, revenue is strongest in the second and third fiscal quarters when colder weather from October to March typically increases demand for beef feed. Other product lines are only marginally affected by seasonal conditions. Certain of the raw materials comprising the Company's products incorporate commodity-based products and the by-products of commodity processing. Fluctuating commodity prices may therefore influence revenues and associated cost of sales as the Company's selling prices are adjusted to reflect current raw materials markets.
Selected Quarterly Financial Information (i)
Internal Control Over Financial Reporting
The Chief Executive Officer and Chief Financial Officer have each signed form 52-109F2 - Certification of Interim Filings and filed it with the appropriate securities regulators in Canada in compliance with Multilateral Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.
Forward-Looking Information
This report contains "forward-looking" information. The forward-looking information includes statements concerning the proposed transaction described herein, Ridley's outlook for the future, as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the risk that the proposed transaction described herein will not be completed, the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of the MD&A included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.
OUTLOOK
Long term growth in global demand for agricultural products will be favourable to livestock and poultry production in North America, but disruptions can arise from the prevailing economic circumstances for livestock and poultry producers, which have historically been cyclical. Factors in Ridley's near term results will continue to be variability in farm gate prices for meat milk, and eggs, the level and degree of volatility in feed prices, and weather conditions. Throughout much of the first half of fiscal 2012, raw material prices trended lower, which had a negative effect on Ridley's margins. Starting in December 2011, raw material prices trended higher, which contributed to improved unit margins for Ridley in the second half of fiscal 2012. Since the start of fiscal 2013 raw material prices have risen even more sharply resulting in the favourable margins for Ridley in the current quarter. However, raw material prices remain volatile by historical standards so there is no certainty that the positive effects of this trend will extend to subsequent periods. The severe drought that impacted much of the major crop growing regions this year has contributed to the declining trend in the U.S. beef cattle herd of more than a decade. Livestock and poultry producers in all sectors will continue to push hard to minimize their feed costs. In response to the uncertainties of this environment, Ridley continues to focus on improving its competitive strengths and value to customers. Initiatives are in progress to improve operating efficiencies using lean manufacturing techniques and to better utilize information technology in logistics and customer service. Ridley continues to develop opportunities in growing lifestyle markets and higher-value-added products that tend to be more stable in market demand. Ridley's strong balance sheet and available debt capacity provide the flexibility necessary to capitalize on acquisition opportunities that fit the Company's strategic goals during this period of uncertainty.
Ridley Inc., headquartered in Mankato, Minnesota and Winnipeg, Manitoba, is one of North America's leading commercial animal nutrition companies. Ridley employs more than 900 people in the United States and Canada in the manufacture, sales and marketing of a full range of animal nutrition products under highly regarded trade names. Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL). Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at . Visit our website at .
Contacts:
Ridley Inc.
Steve VanRoekel
President and CEO
(507) 388-9412
Ridley Inc.
Gordon Hildebrand
Chief Financial Officer
(507) 388-9577
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 24.10.2012 - 20:31 Uhr
Sprache: Deutsch
News-ID 195994
Anzahl Zeichen: 0
contact information:
Town:
MANKATO, MINNESOTA and WINNIPEG, MANITOBA
Kategorie:
Farming
Diese Pressemitteilung wurde bisher 198 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Ridley Inc. Reports Financial Results for Fiscal 2013 First Quarter"
steht unter der journalistisch-redaktionellen Verantwortung von
Ridley Inc. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
